Trump's decision to drop Hassett has significantly reduced expectations for a Federal Reserve rate cut.

According to ME News, on January 17 (UTC+8), US Treasury prices fell as Trump hinted at nominating someone other than National Economic Council Director Hassett to succeed Powell, and traders reduced their expectations for two US interest rate cuts in 2026. The decline in US Treasuries pushed the two-year yield up by as much as 5 basis points to 3.61%, the highest level since the Fed's last rate cut in December. Following Trump's comments on Hassett, short-term interest rate contracts reflected a decreased probability of two 25-basis-point rate cuts by the Fed this year. Meanwhile, the Treasury market continued to be troubled by the December jobs data released a week earlier, prompting Wall Street banks that had previously predicted a rate cut at the Fed's next meeting on January 28 to abandon that view. Morgan inflation economists predict that despite the change in Fed leadership, the Fed will not cut rates further. John Fath, managing partner of BTG Pactual Asset Management US, said, "The previous trade was betting that whoever becomes the next Fed chairman will be dovish. That has reversed in the last few days." (Source: ME)